How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Tony Tax Your Own Question

Tony Tax
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14155
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your UK Tax Question Here...
Tony Tax is online now
A new question is answered every 9 seconds

Sole Trader help

Customer Question

Hi

I have a few questions regarding myself being a sole trader...

In 2009 I was made redundant from company X. Later that year I did some on off work for them as a Sole Trader. Fixed fee, and literally a day here, few hours there for 4-5 months before the work started picking up. I largely worked from home and provided my own computer. My role had changed from the service I used to provide as a PAYE.
During that year I also completed 2 jobs for other clients.

Since 2010-to present date I have been working for this client regularly however providing the new service mentioned above. I provide my own resources, work from home when I must, hire a few helpers when needed (explained below)
I also use a workstation of theirs when convenient. During this period I have also worked for 4-5 other clients. I also have my own website etc. Are there any issues with this arrangement?


On occasion I hire 2 other people to help me out with comnpany X and other clients. This might be 2-4 days work in one go. It's not regular. Maybe 2-3 days every 2-3 months. Would HRMC view them as employee's and therefore I should pay their NI etc? One of them is a full time sole trader whilst the other is Employed and does extra work outside his contract.

One of the above people that I have hired has also provided me with some work, is this an issue?

Also, I have just realized I made a mistake on an old tax return. I put a computer and 2-3 other smaller items as an expense instead of a Capital Expense, which now I know about. What should I do about this?

Thank you,

Submitted: 11 months ago.
Category: UK Tax
Expert:  Tony Tax replied 11 months ago.
Hi.

Can you tell me what the nature of your work is please. Which tax return did you make a mistake on?
Customer: replied 11 months ago.

I am a 3D artist, so similar to a graphic designer.


 


It was the tax year 2010-2011

Expert:  Tony Tax replied 11 months ago.
Thanks.

Leave this with me while I draft my answer.
Expert:  Tony Tax replied 11 months ago.
As far as the errors on the tax return are concerned, you would have been able to claim a 100% deduction under the Annual Investment Allowance rules (read about those here) which is effectively the same as what you have done by claiming the costs as regular expenses. If I were you, I'd let sleeping dogs lie.

As far as your tax status is concerned, you are self-employed in my opinion notwithstanding the fact that you use a workstation at your "employer's" for the sake of convenience on occasion. Working for other clients, having your own website to attract clients and employing sub-contractors to assist you adds to your status as an independent contractor. You should issue invoices for your fees and keep control of your work schedule as much as possible.

The people you use from time to time to assist you are self-employed sub-contractors too in my opinion. The irregular use of their services helps with that claim. Getting work through one of them would not harm your contractor/sub-contractor relationship. They should sort out their own tax and NI responsibilities.

I hope this helps but let me know if you have any further questions.
Customer: replied 11 months ago.

Hi Tony,


 


Thank you for your advice. Should HRMC decide to investigate my tax return what would the likely outcome be? I guess a penalty for getting it wrong, and any small tax difference given that had I used AIA in the first place the same/similar tax deduction would have taken place?


 


With regards XXXXX XXXXX workstation I use company X's regularly but along with my own in equal measure. I also subscribe to a couple of online resources for stock imagery I need to use.


 


I was more worried given the duration I have been working with them which is almost on a 9-5 basis since 2010 with other clients work in and around it.


 


Yes the other two guys I work with do pay their own taxes etc. We all quote and invoice each other as and when etc.


 


One last question for you, with regards XXXXX XXXXX train expenses 24 month rule....


 


As mentioned I worked sporadically for company X in 2009-2010. Which meant I had to get a train to their office, mainly to pick up a brief or work at their office for a few hours.



However tax years 2010-2011, 2011-2012 I trained regularly into their office (24 months)



So I shouldn't claim any train expenses for 2012-2013 for that client?



Thanks heaps,


Smile


 

Expert:  Tony Tax replied 11 months ago.
HMRC are out of time to investigate your 2011 tax return unless they find a similar mistake in a later tax return and use that to open up earlier years. It was a mistake many taxpayers make as they don't necessarily appreciate the difference between different types of expenses. It really won't be a problem.

You cannot normally claim the costs of travelling from home to a fixed place of work whether you are employed or self-employed. If you are effectively working a 9 to 5 routine, that's not good and a claim for travel expenses may be disallowed if your tax return was investigated with the earlier returns also being at risk. I realise that your former employer is probably your largest client in terms of fees but you need to make your routine less like that of a 9 to 5 employee. The fact that your subcontractors help with your work for company X is a plus point.
Customer: replied 11 months ago.

Hi Tony


 


Thanks for the great help.


 


So just to confirm the 24 month rule only applies if I was to work there temporarily? There have been breaks in between where by I may work at home for 1 week then travel in the next etc.


 


In which case I will not claim any further travel expenses to this client.


 


Thank you.


 


 


 


 

Expert:  Tony Tax replied 11 months ago.
Take a look at the notes on the 24 month rule here. Have a think about it in relation to your work pattern and try to decide if you fall foul of the 40% rule.
Tony Tax, Tax Consultant
Category: UK Tax
Satisfied Customers: 14155
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
Tony Tax and other UK Tax Specialists are ready to help you
Customer: replied 11 months ago.
Hi Tony,

I followed up on our chat with a call to Qudos contracting today.
They advised that the 24 month rule didn't apply to me being that Im a sole trader, not an umbrella, paye or ltd company. The chap I spoke with said its because I am not an employee of my company, I am the company.

Is this so?

Thanks
Expert:  Tony Tax replied 11 months ago.
You aren't "the company", you are a sole trader. The 24 month rule does not apply to you. It applies to employees.

However, if a sole trader, a solicitor for example, works from an office which is not in his home, he has a fixed place of work and so the cost of travel to the office and back home again are not tax deductible. If you only worked one week in two at the client office, that doesn't make it a fixed place of work in my book buit the easiest way to deal with it is not to claim the travel expense if it concerns you that much.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
< Last | Next >
  • http://ww2.justanswer.com/uploads/baktax/2009-7-15_202414_Frame.jpg Andrew Baker(baktax)'s Avatar

    Andrew Baker(baktax)

    Personal Tax Adviser

    Satisfied Customers:

    756
    35+ years experience in income tax, CGT, non-residence
  • http://ww2.justanswer.com/uploads/teap007/2009-01-10_145815_bill_justanswer_for_profile.jpg TEAP007's Avatar

    TEAP007

    Tax Preparer

    Satisfied Customers:

    754
    Fully Trained Inspector of Taxes / District Inspector/ Team Leader/ Offshore Consultant/ 41 years
  • http://ww2.justanswer.com/uploads/BE/berduchwal/2011-6-7_84817_pict0854.64x64.jpg berduchwal's Avatar

    berduchwal

    Accountant

    Satisfied Customers:

    669
    Qualified accountant and bookkeeper running my own practice since 2008.
  • http://ww2.justanswer.com/uploads/JO/Josh2010/2012-4-29_19490_GettyImages80121770B.64x64.jpg Joshua's Avatar

    Joshua

    Lawyer

    Satisfied Customers:

    61
    LL.B (Hons), Higher Prof. Dip. Law & Practice
  • http://ww2.justanswer.com/uploads/RO/Ronaann/2012-3-19_23343_SSL22629.64x64.JPG Mrs-Tax's Avatar

    Mrs-Tax

    Tax Adviser

    Satisfied Customers:

    59
    Law Degree, 19 years in UK Tax.
  • http://ww2.justanswer.com/uploads/TG/TGraham12/2012-7-17_81212_bigstockBusinessHandshake508163.64x64.jpg Thomas's Avatar

    Thomas

    Solicitor

    Satisfied Customers:

    48
    Exposure to general tax issues
  • http://ww2.justanswer.com/uploads/struppiaml/2009-10-9_95150_anthony_business_002.jpg AnthonyL's Avatar

    AnthonyL

    Tax Adviser

    Satisfied Customers:

    19
    ATT, ATII, 12 years tax experience